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Consumer-Oriented
E-Commerce
4.1 CONSUMER-ORIENTED APLLICATIONS
The wide range of applications envisioned for the consumer marketplace can be broadly
classified into:
ir Entertainment
(D Financial Services and Information
(iiy Essential Services
(i) Education and Training
Consumer Life-Style Needs Complementary Multimedia Services
Entertainment Movies on demand, video cataloguing. interactive Ads,
Multi-user games, on-line discussions
Financial Services and Financial Home Banking, Financial services, Intormation, Financial
news. news.

Easential Services Home Shopping, Electronic Catalogs,

telemedicine.
remote diagnostics.
Bducation and Training Interactive
education. multiuser
video
games,

conferencing,on-line databases.
4.2
Consumer-Oriented E-Commerc

A. Personal Finance and Home Banking Management

(i) Basic Services
(ii) Intermediate Services
(i) Advanced services

2. Home Shopping
(i) Television-Based Shopping
(i)Catalogue-Based Shopping
3. Home Entertainment
(i) Size of the Home Entertainment Market
(ii) Impact of the Home Entertainment on Traditional Industries

4. Microtransactions of Information
1. Personal Finance and Home Banking Management:

The concepts under basic banking services are what a normal customer would he
transacting with his bank most of the time. They are mainly related to personal finances. I
can be safely be presumed that most of normal transactions that a customer has with his bank
can be classified into the following:
X. Checking his account statements
2. Round the clock banking (ATM)
3 Payment of bills etc.
4 Fund transfer and
S.,Updating of his pass books etc.
Indeed most of these can be done through telephone with suitable passwords etc. excep!
round the clock banking. The concept of Automated Teller Machines is to allow the customer
todraw money from his account at any part of the day (or night). In fact, ATMs are today
thought to be one single concept that changes the way banks functioned. The customer need
not go to the bank at all for his most important service. In other words, both the bank and the
cUstomer became faceless to each other. But it helped the customer by ensuring that he need
 Consumer-.Oriented EE.Commerce 4.3

.modifv his working schedule to visit the bank. At the same time. the banks need not
eot to concept like spli houts, opening on holidays etc. to protect themselves as customer
friendly.
can benoted that the individual ATMs are connected to a Bank Switching Centre. The
Switching Centre's of several banks are interconnected to an association switching centre
May be allbnks of aparticular region, for example). Al such centre s glohally connected
o amain switching centre. While the actualoperations are not important tonote that the PC
are any such computers are not employed at the customer level. It is also argued that an
average customer is more comfortable with the process of simple insertion of a card rather
than complicated operations onPCs. However, we include the ATMs also under e-commerce
Personal Finance and Home Banking Management services include
The newest technologies are direct deposit of payroll, on-line bill payment and
telephone transfers
The technology for paying bills, whether by computer or telephone. is infinitely more
sophisticated than anything on the market a few years ago
In1980s were the days of "stone age" technology because of technology choices for
accessing services were limited
For home banking, greater demands on consumers and expanding need for
information, its services are often categorized as basic, intermediate and advanced
(i)-Basic services
These are related to personal finance
The evolution of ATM machines from live tellers and now to home banking
The ATM network has with banks and their associations being the routers and the
ATM machines being the heterogeneous computers on the network.
This interoperable network of ATMs has created an interface between customer and
bank that changed the competitive dynamics of the industry. See in next figure
Increased ATM usage and decrease in teller transactions
" The future of home banking lies with PC's
() lptermediate Services
The problem with home banking in 1980 is, it is expensive service that requires a PC.
a modem and special software
As the equipment becomes less expensive and as bank offerN broader services, home
banking develop into acomprehensive package that could even include as insurance
entertainment
Consider the computerized on-line bill-payment system
I never forgets to record a payment and keeps track of user account number, name.
amount and the date and we used to instruct with paynent instructions.
4.4 Consumer-Oriented E-Commer..
(ii) Advanced Services
The goal of advanced series is to offer their on-line customers a complete portfolio..
life, home, and auto insurance along with mutual funds, pension plans, hor
financing, and other financial products
The Figure explains the range of services that may wellbe offered by banks in futyr.
The servic3es range from on-line shopping to real-time financial information fror
where in the world

In short, home banking allows consumers to avoid long lines and gives flexibility
2. Home Shopping: The next example is home shopping. For simplicity,we presume i
is television based shopping. It may be noted that this concept is picking up now in India in
smallway, wherein the channels set apart only a very small portion of their broadcasting tim:
to teleshopping. In the simplest case, the channels describe the various aspects of their
product and the customer can order items over phone. The goods are delivered to his home
and paymnent can be made in the normal modes. In a more sophisticated version, orders can
be placed online (through computers) and payment also can be made through credit/debit
cards. It may be noted that several concepts of traditional marketing like negotiation, trial
testing etc. are missing from this scheme and it is most suitable for those customers who are
almost sure of what they need to buy who are too busy to go to the shops. Otherwise. there is
hardly any concept of interaction and there is little scope toensure the quality of product.
after sales services etc.

eShoppingCat

() Television-Based Shopping:
It is launched in 1977by the Home Shopping Network (HSN).
It provides a variety of goods ranging from collectibles, clothing, small electronics.
house wares, jewellery, and computers.
Consumer-Oriented E-Commerce 4.5

When HSN started in Florida in 1977, it mainly sold factory overruns

discontinued items.
and
It works as; the customer Uses her remote Control at shop different
channels with
touch of button. Atthis time, cable shopping channels are not truly interactive.

(i) Catalogue-Based Shopping

In this the customer identifies the various catalogs that fit certain
parameters such as
safety, price, and quality.
The on-line catalog business consists of brochures, CD-ROM catalogs, and on-line
interactive calalogs.
Currently, we are using the electronic brochures.
3Home Entertainment: The next example of this type of commerce is home
eñtertainment. Dubbed online imovies, it is possible for the user to select a movie/CD online
and make his cable operator play the movie exclusively for him (movie on de mand) cause
against payment. Payment can be either online/billed to his account. It is also possible to play
interactive games online/download them to your computer to play .the concept of
downloading games/news etc, at a cost to the mobiles is also a similar concept. It may be
noted that in all these cases, the physical movement of the customer Itrader is avoided: of
course, the computer need not always be a part of the deal.Customer can watch movie, play
games, on-screen catalogs, such as TVguide. In Home entertainment area, customer is the
control over programming Advanced Services
4.6 Consumer-Oriented E-Commerco
Size of the home Entertainment Market:
Entertainment services are playing amajor role in e-commerce
This prediction is underscored by the changing trends in consumer behaviour.
Impact of Home entertainment on traditional industries:
This will have devastating effects on theatre business
Economic issues might allow theatres to maintain an important role in the movie
industry
Today average cable bill is approximately $30 a month
Industry Estimates of consumer Expenditures
1980 ($4.7 bin) 1990($31.0 bin) 1993 ($37.8 bin)
Theatres 49.0% $2.3 14.5% $4.5 13.2% $5.0
Basic cable 35.0% $1.6 34.5% $10.7 36.9% $13.9
Premium cable 16.0% $0.8 16.5% $5.1 14.0% $5.3
Home video 33.8% $10.5 34.8% $13.2
Pay per view 0.7% $0.2 1.1% $0.4

AMicro transactions of information: The telephone directories provide a basic type of

micro transaction. If you want by one particular of item- say - books - they list the addresses
and phone numbers of the various book dealers whom you may contact. Similar facilities are
available on the internet- may be for number of items and also with more details. IT may
include detailed catalogues; other related information etc. of course, the customer has to pay a
smallcharge for visiting the site- each time he visits the site. This can be thought of as an
extension of the earlier deseribed television based ordering. You don't have to order only
those items that are shown in the computer, but search for an item that you need. Also
ordering ison line. Some preliminary two way interactions are also possible.
One change in traditional business forced by the on-line information business is the
creation of a new transaction category called small-fee transactions for microservices
The customer by giving some information away for free and provide information
bundles that cover the transaction overhead.
The growth of small-money transfers could foster a boom in other complementary
information services.

The complexity is also increased in micro services when an activity named.

reverification is entered.

It means checking on the validity of the transaction after it has been approved
Consumer-Oriented E-Commerce 4.7

Maitla

4.2 DESIRABLE CHARACTERISTICS OF AN ELECT

RONIC MARKETPLACE
" Critical mass of Buyers and sellers: To get'critical mass, use electronic
mechanisms
Opportunity for independent evaluations and for customer dialogue and discussion: Users not
only buy and sell products; they compare notes on who has the best products and whose
prices are outrageous
" Negotiation and bargaining : Buyers and sellers need to able to haggle over conditions
of mutual satisfaction, money, terms & conditions, delivery dates & evaluation criteria
" New products and services: Electronic marketplace is only support full information
about new services
"Seamless interface: The trading is having pieces work together so that information can
flow seamlessly
"Resource for disgruntled buyers: It provide for resolving disagreements by returning
the product.

.3 MERCANTILE PROCESS MODELS

Mercantile processes define interaction models between consuners and merchants
for online commerce

4.8.1 Mercantile Models from the Consumer's Perspective

(6) Pre purchase preparation: The pre purehase preparation phase include search and
discovery for a set of products to meet customer requirenents
(a) The consumer information search process.
 Consumer-Oriented E-Commerce
4.8
process.
(b)The Organizational search
experiences.
(c) Consumer search
brokerages.
(d) Information brokers &
information space
ProducUService search and discOver in the

based on various srrtibutes

Comaprison Shoppingand Produt Selection

Negotiation of terms e.g, Price, delivery times

Placement of Order

Authorization of payment

Receipt of Payment

Customer service and Support

(iü)) Purchase consummation: The purchase consummation phase include mercantile

protocols
(a) Mercantile process using digital cash.
(b)Mercantile transaction using credit cards.
(c) Costs of electronicpurchasing.
(ii) Post purchase interaction: The post purchase interaction phase includes customer
service & support
() Pre purchase Preparation- The purchase is done by the buyers, so consumers can be
categorized into 3 types
1. Impulsive buyers, who purchase products quickly
2. Patient buyers, purchase products after making some
comparisons
3. Analytical buyers, who do substantial research before making
products.
decision to purchase
Marketing researches have several types of purchasing:
Specifically planned purchases
Generally planned purchases
Reminder purchase
Entirely unplanned purchases
Consumer-Oriented E-Commerce
4.9

The consumer information search process

Information search is defined as the degree of care, perception,& effort directed
toward obtaining data or information related to the decision problem
The Organizational search process
Organizational search can be viewed as a process through which an organization
adapts to such changes in its external environment as new suppliers,
services. products, &

Consumer Search Experiences

The distinction between carrying out a shopping activity "to
(utilitarian) as opposed to doing it because u love it" (hedonic). achieve goal"
a

Information Brokers and Brokerages

To facilitate better consumer and organizational search,
brokers or brokerages. Information brokerages are needed intermediaries called information
for 3 reasons: Comparison
shopping. reduced search costs, and integration
(ii)_Purchase Consummation
Buyer contacts vendor to purchase
Vendor states price
Buyer and Vendor may or may not engage in
f satisfied, buyer ask the payment to the
negotiation
vendor
Vendor contacts billing service
Biling service decrypts authorization and check buyers
account balance
Billing service gives to the vendor to deliver product
Vendor delivers the goods to buyer
On receiving the goods, the buyer signs and
delivers receipt
At the end of the billing cycle, buyer
receives a list of transactions
4.3.2 Mercantile process using Digital Cash
Buyer obtains e-cash from issuing bank
Buyer contacts seller to purchase product
Seller states price
Buyer sends e-cash to seller
Seller contacts his bank or billing service to
verify the validity of the cash
Bank gives okay signal
Seller delivers the product to buyer
Seller then tells bank to mark the e-cash as
"used" currency
4.10
Consumer-Oriented E-Commerce
4.3.3 Mercantile Transactions Using Credit Cards
Two major components compromise credit card transactions in this process: electroni.
authorization and settlement
In retail transaction, a third-party processor (TPP) captures information at the point a8
sale, transmits the information to the credit card issuer for authorization
communicates a response to the merchant and electronically stores the information
for settlement and reporting.
The benefits of electronic processing include the reduction in credit losses, lower
merchant transaction costs, & faster consumer checkout & merchant-to-bank
settlement

A step-bystep account of retail transaction follows:

Step1: A customer presents a credit card for payment at a retail location
Step2: The point-of-sale software directs the transaction information to the local
network

Step3: System verifies the source of the transaction and routes it.
Step4: In this, transaction count and financial totals are confirmed between the
terminal and the network

Step5: In this, the system gathers all completed batches and processes the data in
preparation for settlement
A merchant client takes one of two forms:
Merchants are charged a flat fee per transaction for authorization and data capture
services

The other form of billing allows merchants to pay a"'bundled" price for authorization.
data capture, & settlement
Cost of Electronic Purchasing:
Cash seems to be preferable to electronic payments, such as, on-line debit, credit, and
electronic check authorization.Consumers appear to spend more when using cards then when
spending cash
purchase Interaction
Returns andclaims are an important part of the purchasing process
Other complex customer service challenges arise in customized retailing are:
Inventory issues: To serve the customer properly, a company should inform a customer
right away and if the item is in stock, a company must able to assign that piece tocustomer
Database access and compatibility issues: Customers should get kind of services by casy
issues like calling an 800 number
Customer service issues: To clear the doubts of customer about product
Consumer--Oriented E-Commerce 4.11

A34Mercantile Models from the Merchant's Perspective

To better understanding . it is necessary to examine the OMMC-Order Management
Cwcle. The OMC includes eight distinct activities. The actual details of OMC vary from
industry to industry and also for individual products and services. OMC has generic steps
shown in the following diagram:
() Order planning &Order generation.
(ii) Cost estimation &pricing.
(iii) Order receipt & entry.
(iv) Order selection & prioritization.
(v) Order Scheduling
(vi) Order fulfilment & delivery.
(vii) Order billing &account/payment management.
(vii) Post sales service.
1. Order planning & order Generation- Order planning leads to order generation.
sales force
Orders are generated in a no. of ways in the e-commerce environment. The
broadcasts ads (direct marketing), sends personalized e-mail to customers (cold calls), or
creates a WWW page

Customer Inquiry and Order Palcing Generation

Cost Estimation and Pricing of Product services

Order Receipt and Entry

Order selection and prioritization

Order Scheduling

Order fulfillment and Delivery

Order Billing and Accountpayment management

Customer Service and Support

2.Cost Estimation & pricing- Pricing is the bridge between customer needs & company
4.12 Consumer-Oriented E-Commerce
capabilities. Pricing at the individual order level depends on understanding the value to the
customer that is generated by each order, evaluating the cost of filling each order: o
instituting a system that enables the company to price cach order based on its value &cost
3. Order Receipt & Entry- After an acceptable price Quote, the customer enters tha
order receipt &entry phase of OMC. This was under the purview of departments
titled customer service, order entry, the inside sales desk,or customer liaison. vaariously
4. Order Selection & Prioritization- Customer service representatives are also often
responsible for choosing which orders to accept and which to decline. Not, all customers
orders are created equal; some are better for the business.
5. Order Scheduling- In this phase the prioritized orders get slotted into an actual
production or operational sequence. This task is difficult because the different functional
departments- sales, marketing,, customer service, operations, or production- may have
conflicting goals, compensation systems, & organizational imperatives: Production people
seek to minimize equipment changeovers, while marketing & customer service reps argue for
special service for special customers.
6. Order Fulfilment & Delivery- In this actual provision of the product or service is
made. It involves multiple functions and locations.
7. Order Billing & AccountPayment Management- After the order has been fulfilled
& delivered; billing is given by finance staff. The billing function is designed to serve the
needs and interests of the company, not the customer.
8. Customer Service and Support- This phase plays an increasingly important role in
all elements of a company's profit equation: customer, price, & cost. It can include such
elements such as physical installation of a product, repair &maintepande, customer training.
equipment upgrading & disposal.